Merchants accepting payment credit card transactions from a physical payment card are generally required to acquire or lease a point-of-sale terminal (POS) from a bank or payment service provider (PSP). Such payment cards may be credit cards or debit cards, or other similar instruments (such as prepaid cards, e-purses, etc.). A PSP is an intermediary who provides payment services to merchants, and can aggregate payments for interaction with transaction acquirers (generally banks). The POS is a computational device adapted to process information and to communicate with the merchant's bank or PSP, and it also contains a credit card reader and a user interface. The credit card reader will typically be adapted to read an EMV chip in a credit card, and to implement the EMV workflows. It will also need to comply with relevant standards for reading of credit cards, such as ISO/IEC 7816 for contact cards and ISO/IEC 14443 for contactless cards.
The POS not only needs to perform these tasks, but it needs to do so securely to minimise the risk of fraudulent transactions or fraudulent behaviour from any party involved with a transaction or potentially able to observe it. A conventional POS is therefore costly to produce, and this cost is generally passed on directly or indirectly to the merchant in high rental fees or high transaction charges.
Where a merchant is involved in a large number of credit card transactions, the costs associated with a POS may not be significant for the merchant, and may be offset by speed and convenience in making a credit card transaction through an optimised system. For merchants who are involved in only occasional credit card transactions, the cost of a conventional POS may be a deterrent to its use. Consequently such merchants will often not accept credit card payments at all, which is an unwanted constraint on the merchant's ability to accept payment. Alternatively, such merchants may only accept credit card payments virtually through an online provider—this is not convenient in a physical store and has a different set of associated fraud risks.
There are a significant number of merchants falling into this category. Many will previously have preferred payment by personal cheque, but as banks are now attempting to scale back or even eliminate the personal cheque, this option may no longer be available.
It is therefore desirable to provide methods and apparatus to enable a merchant to accept physical credit card payments without a conventional POS but in such a way that the transactions are convenient, effective and secure.